MicroStrategy's Bitcoin reserve surpasses the size of the next largest corporate Bitcoin hoard substantially.
In the whirlwind of 2024, MicroStrategy (MSTR plummeting 1.11%) became a stock sensation, and the reason isn't hard to guess: Bitcoin. The tech giant is such a staunch supporter of crypto that it plans to pour an astounding $42 billion into its crypto treasure chest over the next three years.
While other companies own a bit of Bitcoin, none can compare to MicroStrategy's colossal stash. Bitcoin Treasuries reports that as of December 31, MicroStrategy held a mind-boggling 446,400 bitcoins. That's ten times more than the next-largest position, which belongs to Marathon Digital, boasting a less impressive 40,435 bits. The total Bitcoin held by the largest non-mining company, electric vehicle titan Tesla, is a mere 9,720. Elon Musk, Tesla's CEO, has a history of embracing crypto, often tossing out cryptic Bitcoin-related tidbits on social media.
But why is MicroStrategy so Bitcoin-mad, and what does it mean for you, dear investor?
MicroStrategy's Bitcoin Obsession
Comparatively, MicroStrategy manages bitcoins like no other company. The sheer volume of their Bitcoin holdings puts them in a league of their own. MicroStrategy's co-founder Michael Saylor is one of the best-known Bitcoin bulls around, and he's in no rush to halt Bitcoin buying. As Saylor says, "Every day is a good day to buy Bitcoin."
At this point, MicroStrategy has effectively become a Bitcoin holding company. While the enterprise software and business intelligence business still exists and helps this tech stock climb, it's the surging popularity and rising value of Bitcoin that have made this stock an investment sensation.
The Fundamentals Factor
However, it's worth noting that MicroStrategy's software business is quite underwhelming. The company doesn't generate a profit, and revenue has been steadily declining. The main reason to consider investing in the stock is if you're bullish on Bitcoin's price increases.
Investing in MicroStrategy: Is It Worth It?
So, is MicroStrategy a wise addition to your investment portfolio? If you're a die-hard Bitcoin enthusiast, it might be worth considering. MicroStrategy certainly offers you exposure to the crypto world. But for the majority of investors, it's probably better to stay away due to the inherent volatility of Bitcoin. As a caution, the cryptocurrency has historically been subject to sharp corrections in value. Without strong fundamentals to fall back on, MicroStrategy's value will be entirely dependent on Bitcoin's performance.
MicroStrategy's current market cap hovers around $75 billion, but the company only generates a paltry $500 million in annual revenue. It's challenging to find a reasonable valuation metric for such a disconnect between the stock's price and its fundamental value. Ultimately, the stock is a speculative gamble that's right for only the most risk-tolerant investors.
- Despite MicroStrategy's struggling software business and declining revenue, its obsession with Bitcoin has significantly increased the company's value, making it an investment sensation with a market cap of around $75 billion.
- As the largest non-mining company holder of Bitcoin, MicroStrategy, under the guidance of Bitcoin bull Michael Saylor, continues to invest heavily in cryptocurrency, aiming to accumulate up to $42 billion worth of Bitcoin by 2024.
- Investors considering MicroStrategy as an addition to their portfolio should be aware that the company's value is highly dependent on Bitcoin's performance, as it currently holds more than 446,000 Bitcoins and generates only a small fraction of its value from its software business.
- With the seemingly enormous potential of Bitcoin and MicroStrategy's aggressive investing strategy, it's essential for investors to weigh the inherent volatility and speculative nature of the cryptocurrency market against the potential for substantial returns.
